oil

by Michele Delera - On September 10, Venezuelan opposition leader Leopoldo Lopez was sentenced to thirteen years and nine months in prison. Arrested on grounds of inciting violence during the wave of protests that engulfed Caracas and other major cities less than a year ago, Mr Lopez is but another casualty of the executive’s often criticized interference in judicial matters. However, with President Maduro’s approval ratings lower than ever and street protests still ongoing, the sentence might be interpreted as a sign of the government’s weakness – a last-ditch attempt at intimidating the opposition ahead of December’s parliamentary elections.

by Filippo Clô - As regularly happens since oil prices started to fall in July 2014, prophesies about the imminent end of the shale oil industry continue to fill the newspapers. The most recent and resounding attack came from the Lehman Brothers bankruptcy’s predictor, David Einhorn. At the Ira Sohn investment conference in New York on May 4th, he claimed that shale oil producers rely on a trashing business model.

by ISPI Energy Watch - Some time ago we discussed whether US independents could become the new “swing producers”. It does not seem so. Or maybe it is going to happen. April figures and new information leave us in the middle of nowhere, as no piece of the puzzle seems to fit into the other.
EIA and IEA have each revised upwards their 2015 oil demand forecast (respectively to 1 and 1.1 million bbl/day). This should be good news in terms of market rebalancing; and it heralds a potential for price increase. Except that oversupply keeps raiding on top of the increase in demand and stays around 1.7 million bbl/day. Forecasts suggest that it should lower in the second half of the year; but all or almost all forecasts confirm that oversupply is here to stay, and so at least for the whole of 2015.

by ISPI Energy Watch - Glimpses of hybris appear to emerge in the European energy policy and the debate surrounding it. Or, at least, evidence of a new assertiveness. Once upon a time, it was just fear of supply insecurity. Ten years ago it would have been unthinkable, or at least scary, to face a disruption from any of our significant energy suppliers.

Oil price dropping 50% or more in a few months should be good news for the economies of consuming countries. Thus, we are flooded with the econometrics of the expected raise in national GDP; and daily presented with the goodies that cheap oil will deliver to economic growth. That we will benefit in the short term may be a fact (history will tell); and how much we will benefit we can thus leave to modelling. That there may also be downsides seems however to attract less interest and literature. And unfortunately downsides there are, and may be as bad as to overcome short-term benefits.

Massimo Nicolazzi, head of the ISPI Energy Watch, delivered today the opening lecture at the annual conference of the Centro studi di economia tecnica dell’energia Giorgio Levi Cases (University of Padua).